Bernstein SocGen Group analysts reiterated an Outperform rating and $22.00 price target on Riot Platforms (NASDAQ:RIOT)
The analysts comment "Riot announced a 9.25% stake in Bitfarms (not covered) with a public acquisition bid directly to Bitfarms’ shareholders. Riot has offered $2.3 per share - 24% premium to the Bitfarms 1 month average price - Bitfarms management rejected the private offer last month. We believe, Riot is the most ambitious Bitcoin miner to consolidate the space, with aspirations to build the world’s largest public listed Bitcoin miner. Few quick comments - 1. We understand, Riot is making a pitch to shareholders, amidst management uncertainty on Bitfarms. Bitfarms recently had an abrupt CEO change, with governance questions raised by the terminated CEO against the company founders. Bitfarms share price is down 48% in last 3 months, been flattish since the CEO termination in May. 2. Bitfarms and Riot combined would be 19.7 eH/s with 1GW of power capacity. Including Riot and Bitfarm’s future capacity expansion, Riot expects the combined facility to be 52 eH/s with 1.5 GW of combined power by 2024 end, making it the largest public listed Bitcoin miner. As part of our Bitcoin miner thesis, we believe, the Bitcoin mining business is becoming tougher for smaller players, with limited capital to ramp up on the global hash power race. We believe, U.S Bitcoin mining space would consolidate to ~5 players controlling substantial capacity (more than 20 miners are publicly listed in the U.S). 3. Riot today manages 750MW at Rockedale, Texas with a pipeline to build another 1 GW at Corsicana, Texas. If power becomes the biggest constraint to scale up AI computation, we see Bitcoin miners as a strategic asset controlling power, land and with significant operating capabilities in running data centers. The smaller Bitcoin miners are also seeing competitive interest from AI data centers, looking to acquire sites. The top Bitcoin miners should ramp up their M&A game, for long term strategic relevance. Bitfarms has land sites in Canada, Paraguay and Argentina, providing geographical diversification to Riot. 4. Riot has the financial capacity to consolidate the space, with no debt, more than $1.3bn of free cash and Bitcoin on balance sheet."